The Lord’s Prayer
Our Father, who art in heaven, hallowed be thy name. Thy Kingdom come, Thy Will be done, on earth as it is in heaven. Give us this day our daily bread and forgive us our trespasses, as we forgive those who trespass against us. And lead us not into temptation, but deliver us from evil. Amen.
8:00 am
Good Morning!
SPX futures rose to 7500.80 in the overnight session, rising through the Cycle Top resistance at 7485.00. Should it open above that level, SPX may continue its rally to new heights. If calm persists in the next week, there is a possibility of a blow-off top into the end of the month. A point of caution, however. While the current Master Cycle, on average, allows more time for the rally, it is now in a variance zone where a reversal may come early.
Today’s options chain shows Max Pain near 7475.00. Long gamma may begin above 7500.00 while short gamma resided beneath 7400.00.
ZeroHedge reports, “Futures rebounded from the post-FOMC selloff, and oil prices fell as Trump signed the Iran MOU two days early to end the war in the Middle East (in the symbolic Palace of Versailles of all place) and some energy shipments began to transit the Strait of Hormuz.”
The premarket VIX is consolidating within yesterday’s trading range and beneath the mid-Cycle resistance. The Cycles Model allows a possible “tail” beneath the Triangle formation. The tail anticipates calm in the markets, possibly through the end of the month.
The June 24 options chain shows Max Pain at 17.00. Short gamma dwells between 14.50 and 16.00. Long gamma begins at 18.00, but tapers off at 32.00. Not much risk expected here.
The 10-year US Bond Yield continues to consolidate above the 52-day Moving Average at 44.24. Should it decline beneath support, we may see a three week decline toward the mid-Cycle support at 42.25. Note the Triangle formation suggesting a decline to the bottom trendline near 40.00. While we have seen elongated tails on multiple Triangle formations recently, that feature is not a constant part of the design.
ZeroHedge comments, “With all the suspense of a magician revealing a card you watched him palm, the Federal Reserve voted unanimously — gasp — to leave rates exactly where they were, parked at 3.5%–3.75% like a car nobody intends to move.”
USD tapped the neckline of the Head & Shoulders formation this morning at 100.81, setting off alarms among the dollar bears. While this may be called a technical breakout, there is also a strong likelihood of a pullback lasting a week or two prior to an all-out push above the line. WE may consider this a warning, even if it doesn’t break through.
Bitcoin is showing new strength in its decline. Should it continue to decline, a possible panic session may develop early next week. The Cycles Model infesr a possible decline through the end of July, giving it plenty of time to hit or exceed its possible (initial) target at 50.000.
Crude oil may have made its final push to the 200-day Moving Average at 73.58. The reversal may be imminent. The Cycles Model suggests the ensuing rally may last to mid-August. A possible minimum target for the rally may be 132.00 as central banks pile into oil.
ZeroHedge observes, “Energy flows through the Strait of Hormuz are beginning to restart on Thursday after the interim U.S.-Iran peace deal, with several Saudi-controlled supertankers transiting the critical waterway and exiting the Persian Gulf.”
ZeroHedge raises the alarm, “The U.S.-Iran interim peace deal has been signed, and the normalization of the Strait of Hormuz is now beginning. Tanker traffic through the critical waterway is slowly resuming, though a full return to pre-war or near-pre-war energy flows could take months.
But behind the urgency to get the memorandum of understanding deal across the finish line were two uncomfortable realities.”
Gold futures may be resuming its decline toward the Cycle Bottom at 3732.93. While retail investors are starting to show, expecting gold to maintain its low near 4000.00, central banks must sell their gold to obtain oil, which is in dire scarcity. The Cycles Model suggests the decline may last to mid-July. Meanwhile, the World Gold Council released a study showing 45% of its respondents “expect to increase their gold reserves in the next 12 months.” Impeccable timing.